FAQs

Direct Loan FAQs

Students do not have to start repayment until six months after they graduate or they
fall below half-time status. However, you can make payments at any time towards your
loan.

The U.S. Department of Education pays (subsidizes) the interest while the borrower
is in school and during grace and deferment periods on subsidized Direct Loans. The
borrower is responsible for paying the interest that accrues on unsubsidized Direct
Loans.

You have a grace period of 6 months after you graduate, leave school or drop below
half-time status before you must begin repayment on a loan. During the grace period
on a subsidized loan you don't have to pay any principal and you won't be charged
interest. On an unsubsidized loan you don't have to pay any principal, but you will
be charged interest. You can either pay the interest as you go along or it will be
capitalized (i.e., added to the principal loan balance) later.

Common Rules: There are also some rules that apply to all student borrowers.

They include:

All students must complete the FAFSA (this must also be completed for Parent PLUS
Direct Loans)

All students must meet the general eligibility requirements for financial aid

All students will go to KCTCS Student Services Center and enter their e-ID and password
to accept their Direct Loan(s) (Exception Parent PLUS Direct Loans are noted below)

Student Borrowers:

Because this is the first year for KCTCS to participate in the Federal Direct Loan
Program, all students wishing to apply for a Subsidized Direct Loan and/or Unsubsidized
Direct Loan need to complete the following :

Direct Loan Master Promissory Note

Entrance Loan Counseling

Accept your student Loan in KCTCS Student Services Center

Parent Borrowers:

Parent borrowers wishing to apply for a Direct Parent PLUS Direct Loan are required
to complete the following:

Direct Loans are never sold by the federal government, so student borrowers always
know who holds their loans and the terms of their loans.

FFELP (i.e., Stafford) loans are frequently sold, with promised benefits not honored
by the new loan holder(s). Borrowers will be able to consolidate their previous FFELP
loans with their direct loans for free through the Federal Direct Consolidation Program.

Loans are able to be processed quickly with only one lender involved resulting in
a smoother student loan delivery process.

Federal Direct Loans offer a true, income contingent loan repayment option with loan
forgiveness after 25 years of repayment.

Borrowers with a desire to work in relatively low-paying, community service jobs can
do so while minimizing the fear of defaulting on the repayment of their student loans.

Direct Lending has the new Public Service Loan Forgiveness program that will forgive
remaining debt after 10 years of eligible employment and qualifying loan payments
for people working in key public service professions such as teaching, government,
social work, law enforcement, and non-profit 501(c)(3) organizations.

Under the Direct Loan Program the Parent PLUS Interest Rate is 7.9%.

Under FFELP the Parent PLUS Interest Rate was 8.5%.

The Department of Education is the new lender; therefore, you must complete the required
forms with them in order to receive your loan funds.

I have prior loans from a bank, what options do I have in repayment now that I will
have FFELP Loans and Direct Loans?Federal Student Direct loans can be consolidated along with outstanding student loan
debt from FFELP (i.e., Stafford Loans). After graduation you have a choice. You may
either make individual payments to your previous lender(s) for FFELP and the Department
of Education for Direct Loans. However, if you do not want to consolidate your FFELP
and Direct Loans, you will have to make separate payments to the different loan servicers.

For information on consolidation or an application to consolidate go to the Federal
Direct Consolidation website.

Yes, the eligibility requirements and loan amounts are the same. The Department of
Education acts as a lender, providing funds for Direct Loans and Parent or Grad PLUS
loans in the same amounts as the Stafford and Parent or Grad PLUS loans offered through
the Federal Family Education Loan Program. In FFELP, banks and other private lenders
provide these loans.

No, you will not be able to choose a private lender for receiving a new loan, as the
Department of Education is the only student loan lender after July 1, 2010.